20 Microns: How Will the Mining Stock Utilise Its ₹100 Cr Capex to Boost Growth?

Synopsis: The company plans a Rs. 100 crore, 24-month CAPEX to expand capacity, upgrade technology, develop high-value products, and implement sustainable initiatives, targeting 18% annual growth, improved margins, and strengthened market leadership in speciality minerals.

The shares of this leading Indian manufacturer of industrial minerals and additives are in the spotlight after announcing a Rs. 100 crore expansion plan spread over the next 24 months, focusing on increasing production capacity, improving operations and more.

With a market capitalisation of Rs. 652 cr, the shares of 20 Microns Ltd closed at Rs. 185 per share, up from its previous close of Rs. 171.80 per share. Over 5 years, it has delivered a return of 392 percent.

The 20 Microns Ltd Board has decided that a significant portion of the Capex will be directed toward upgrading infrastructure across existing and planned manufacturing and R&D facilities, advancing high-performance mineral product development, strengthening quarrying operations for captive consumption, implementing automation and energy-efficient manufacturing systems, and supporting ESG initiatives through green and brownfield capacity expansions.

Growth Outlook

The company is ready for good financial results, with 18% annual growth rates projected for the period of the next three years due to the increased capacity and improved product mix that will result from it. 

In addition, it is anticipated that EBITDA margins will be able to grow between 200 and 250 basis points, due to both scale efficiencies and disciplined cost control, as well. Return on Capital Employed ratios will also improve, with ROCE projected to be in the range of 18% to 20% in the medium term, reflecting improved capital productivity. 

All of these factors give a confident indication that the business will continue to grow at high levels for the foreseeable future due to management’s strategic investment and operational excellence and to provide consistent double-digit growth. The company aims to lead the Performance Minerals & Functional Additives segment, targeting over 20% market share in high-value products by FY 2030.

In addition, capacity enhancements at the Malaysian subsidiary are projected to further drive growth, targeting annual production of 1.08 lakh MT and 0.96 lakh MT, including quarrying operations by mid-FY2028. The newly formed joint venture with Sievert aims to boost production capacity by 25% year-on-year, reaching 0.22 lakh MT by the end of FY2029.

Sustainability and ESG Initiatives

The expansion plan continues to include sustainability as one of the four key elements. As such, 15% of total Capital Expenditure will be allocated to energy-efficient initiatives, waste reduction, and environmentally friendly product solutions. This will result in an estimated 5% to 8% reduction in energy expenses over three years, and an estimated 15% reduction in carbon emissions.

The company’s commitment to responsible manufacturing and supporting its ESG (Environmental, Social, and Governance) growth is further evidenced by the company’s diversified customer base operating in more than 80 countries, and the increasing demand for speciality minerals originating from India’s economic development and infrastructure growth.

Management Perspective

From Management’s point of view, they consider their investment of Rs. 100 Crores as an important part of a long-term strategy to enhance the business’s production capabilities, improve its range of products and provide more environmentally friendly manufacturing processes. This will allow 20 Microns to take advantage of the increasing demand for speciality mineral products both in India and abroad, as well as provide greater shareholder value over time.

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